On January 1, 2016, Asure Corporation acquires the net assets of BlueBox Inc. and records the acquisition as a merger. Asure/s acquisition entry looks like this (amounts in thousands):

General Journal
Description	Debit	Credit
Current assets	12,000
Plant and equipment	40,000
Identifiable intangibles	80,000
Goodwill	700,000
Notes payable		100,000
Cash		700,000
Earnings contingency liability		32,000

Brand names and customer lists comprise the identifiable intangibles.

Required

For each of the following independent situations, prepare Asure's journal entry, if any, to record the information (amounts are in thousands).

a. On March 1, 2016, Asure receives information that the appraiser of BlueBox's plant and equipment was not qualified. A new appraiser values BlueBox's plant and equipment at $30,000 as of the date of acquisition. If no journal entry is required, select "No entry" as the journal description(s).

General Journal
Description	Debit	Credit
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer

b. On January 17, 2017, Asure learns that inventory mistakenly valued at $1,000 at the date of acquisition was really worth $400 at that time.

General Journal
Description	Debit	Credit
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer

c. On June 15, 2016, BlueBox's equipment, acquired by Asure, was damaged in a fire. The amount of damage is $4,000.

General Journal
Description	Debit	Credit
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer

d. On September 22, 2016, Asure determines that because of an increase in demand for BlueBox's products since the date of acquisition, the brand names recorded at the date of acquisition have increased in value by $3,000. In addition, the earnout agreement's fair value has increased by $2,000.

General Journal
Description	Debit	Credit
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
To record increase in fair value of brand names.
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
AnswerGoodwillPlant and equipmentLoss on inventory (income)InventoryLoss on equipment (income)Loss on earnout (income)Gain on earnout (income)Earnings contingency liabilityBrand namesGain on brand names (income)No entry	Answer	Answer
To record increase in fair value of earnout.

Answer rating: 100% (QA)

a On March 1 2016 Asure receives information that the appraiser of BlueBoxs plant and equipment was ... View the full answer